You should read the following discussion of our financial condition and results of operations together with our Restated Financial Information which have been included in this Draft Red Herring Prospectus. The following discussion and analysis of our financial condition and results of operations is based on our Restated Financial Information for the nine months period ended December 31, 2022 and for financial years ended March 31, 2022, 2021 and 2020 including the related notes and reports, included in this Draft Red Herring Prospectus prepared in accordance with requirements of the Companies Act and restated in accordance with the SEBI Regulations, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries. Our Financial Statements, as restated have been derived from our audited financial statements for the respective period and years. Accordingly, the degree to which our Restated Financial Information will provide meaningful information to a prospective investor in countries other than India is entirely dependent on the readers level of familiarity with Indian GAAP, Companies Act, SEBI Regulations and other relevant accounting practices in India.
This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those described under "Risk Factors" and "Forward Looking Statements" on pages 49 and 32 respectively, and elsewhere in this Draft Red Herring Prospectus.
Our Financial Year ends on March 31 of each year. Accordingly, all references to a particular Financial Year are to the 12 months ended March 31 of that year.
BUSINESS OVERVIEW:
We are an ISO 9001:2015 certified integrated engineering, procurement and construction ("EPC") company with experience in design and construction of various infrastructure projects for the Central and State Government, autonomous bodies, and private bodies across 9 States and 1 Union territory in India. Our principal business operations are broadly divided into four categories: (i) Water Supply Projects ("WSP"); (ii) Railway Projects; (iii) Road Projects and (iv) Irrigation Network Projects.
Our major projects include constructing, designing, building, implementing, operating, maintaining and developing Water Supply Projects ("WSPs") including Water Treatment Plants ("WTPs") along with pumping stations and laying of pipelines for supply of water, as well as other projects such as Roads, Bridges, Tunnels, Warehouses, Buildings, Railway Buildings including platforms, stations, quarters, administrative buildings, Rail-Over-Bridges and Waste Water Treatment Plants (" WWTPs"). For further information please see "Our Business" on page 180.
Key Performance Indicators
In evaluating our business, we consider and use certain key performance indicators that are presented below as supplemental measures to review and assess our operating performance. The presentation of these key performance indicators is not intended to be considered in isolation or as a substitute for the Restated Financial Information included in this Draft Red Herring Prospectus. We present these key performance indicators because they are used by our management to evaluate our operating performance. Further, these key performance indicators may differ from the similar information used by other companies, including peer companies, and hence their comparability may be limited. Therefore, these matrices should not be considered in isolation or construed as an alternative to Ind AS measures of performance or as an indicator of our operating performance, liquidity, profitability or results of operation. A list of our KPIs for the nine months ended December 31, 2022 and Financial Years ended March 31, 2022, 2021 and 2020 is set out below:
( in Million, unless stated otherwise)
| Nine months nine months period ended December 31, 2022* | Year Ended March 31, 2022 | Year Ended March 31, 2021 | Year Ended March 31, 2020 | |
| Revenue from Operations(1) | 7,127.01 | 7,856.13 | 4,857.31 | 3,731.51 |
| Total Income (2) | 7,142.73 | 7,873.87 | 4,876.73 | 3,753.93 |
| EBITDA(3) | 937.97 | 886.41 | 473.21 | 401.75 |
| EBITDA Margin(4) (in %) | 13.13 | 11.26 | 9.70 | 10.70 |
| Net Profit for the Year / Period(5) | 507.35 | 448.47 | 189.82 | 126.55 |
| Net Profit Margin(6) (in %) | 7.10 | 5.70 | 3.89 | 3.37 |
| Return on Net Worth(7) (in %) | 23.44 | 32.94 | 18.24 | 14.36 |
| Return on Capital Employed(8) (in %) | 20.54 | 29.94 | 19.40 | 16.63 |
| Debt-Equity Ratio(9) | 0.92 | 1.11 | 0.98 | 1.29 |
| Interest Coverage Ratio(10) | 4.34 | 3.51 | 2.46 | 2.04 |
| Days Working Capital (in days) (11) | 80 | 54 | 54 | 40 |
*Not annualised |
Notes:
(1) Revenue from operations represents the revenue from sale of service & product & other operating revenue of our Company as recognized in the Restated financial information. (2) Total income includes revenue from operation and other income (3) EBITDA means Earnings before interest, taxes, depreciation and amortization expense, which has been arrived at by obtaining the profit before tax/ (loss) for the year / period and adding back finance costs, depreciation, and amortization expense. (4) EBITDA margin is calculated as EBITDA as a percentage of total income. (5) Net Profit for the year/period represents the restated profits of our Company after deducting all expenses. (6) Net Profit margin is calculated as restated profit & loss after tax for the year/period divided by total income. (7) Return on net worth is calculated as Profit for the year/period, as restated, attributable to the owners of the Company for the year/ period divided by Average Net worth (average total equity). Average total equity means the average of the aggregate value of the paid-up share capital and other equity of the current and previous financial year/period. (8) Return on capital employed calculated as Earnings before interest and taxes divided by average capital employed (average capital employed calculated as average of the aggregate value of total equity, total debt and deferred tax liabilities of the current and previous financial year/period). (9) Debt- equity ratio is calculated by dividing total debt by total equity. Total debt represents long term and short term borrowings. Total equity is the sum of equity share capital and other equity. (10) Interest coverage ratio is defined as Earnings before interest and taxes (EBIT) divided by finance cost for the year/period. (11) Days Working Capital is arrived at by dividing working capital (current assets less current liabilities) by revenue from operations multiplied by the number of days in the year/period (365/275).
SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL PERIOD
In the opinion of the Board of Directors of our Company, since the date of the last financial statements disclosed in this Draft Red Herring Prospectus, there have not arisen any circumstance that materially or adversely affect or are likely to affect the business activities or profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months except as mentioned below:
(a) The Board approved and passed resolution on January 20, 2023 to raise funds by making Initial Public Offering. (b) The shareholders approved and passed special resolution on January 28, 2023 to authorize the Board of Directors to raise funds by making Initial Public Offering. (c) Clause V of the Memorandum of Association of our Company was amended to reflect increase in the authorized share capital of our Company from 300 million consisting of 30,000,000 Equity shares of 10/- each to 1500 million consisting of 150,000,000 Equity shares of 10/- each. (d) Pursuant to the approval of shareholders granted in the extra-ordinary General meeting held on January 28, 2023, the company issued and allotted fully paid up bonus share on February 14,2023 at par in proportion of Two new equity share of INR 10 each for every one existing fully paid up equity share of INR 10 each held on the record date of February 10, 2023.
FACTORS AFFECTING OUR RESULTS OF OPERATIONS
Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factors" on page 49. Our results of operations and financial conditions are affected by numerous factors including the following:
(a) Change in government policies or focus;
(b) outstanding litigations involving our Company, if determined adversely;
(c) Our projects are exposed to various implementation and other risks, including risks of time and cost overruns, and uncertainties; (d) Timely completion of our projects is interdependent on the availability and performance of subcontractors; and (e) Dependency on performance of the joint venture partner in case of the projects undertaken through joint ventures;
BASIS OF PREPARATION, MEASUREMENT AND SIGNIFICANT ACCOUNTING POLICIES
1.1 Basis of Preparation and Measurement
A. Statement of Compliance
The restated financial information of the Company comprise the Restated Balance Sheet as at 31st December 2022, 31st March 2022, 31st March 2021 and 31st March 2020, the Restated Statement of Profit and Loss (including Other Comprehensive Income), Restated Statement of Changes in Equity and the Restated Statement of Cash Flows for the nine-months ended 31st December 2022 and years ended 31st March 2022, 31st March 2021 and 31st March 2020, the summary of significant accounting policies and explanatory notes (collectively, the ‘Restated Financial Information).
These Restated Financial Information have been prepared by the management as required under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2018, as amended ("ICDR Regulations") issued by the Securities and Exchange
Board of India (SEBI), in pursuance of the Securities and Exchange Board of India Act, 1992, for the purpose of inclusion in the Draft Red Herring Prospectus (‘DRHP) in connection with the proposed initial public offering of equity shares of Face Value 10 each of the company comprises of fresh issue of Equity Shares (‘IPO), prepared by the Company in terms of the requirements of:
(a) Section 26 of Part I of Chapter III of the Companies Act, 2013 ("the Act");
(b) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 as amended; (c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the
Institute of Chartered Accountants of India (ICAI) (the "Guidance Note"); and
(d) E-mail dated 28 October 2021 from Securities and Exchange Board of India ("SEBI") to
Association of Investment Bankers of India, instructing lead managers to ensure that companies provide financial statements prepared in accordance with Indian Accounting Standards (Ind-AS) for all the three years and stub period (hereinafter referred to as the "the SEBI e-mail").
The Restated Financial Information of the Company have been prepared to comply in all material respects with the Indian Accounting Standards ("Ind AS") as prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time), presentation requirements of Division II of Schedule III to the Act, as applicable to the financial statements and other relevant provisions of the Act.
The Restated Financial Information has been compiled by the Company from:
1. Audited Special Purpose Interim Financial Statements of the Company as at and for the nine-months period ended 31st December 2022 prepared in accordance with recognition and measurement principles under Indian Accounting Standard (Ind AS) 34 "Interim Financial Reporting", specified under section 133 of the Act and other accounting principles generally accepted in India and presentation requirements of Division II of Schedule III to the Companies Act, 2013 (the "Special Purpose Financial Statements") which have been approved by the Board of Directors at their meeting held on 27th March 2023.
2. As at and for the years ended 31st March 2022, 31st March 2021 and 31st March 2020: From the Audited Special Purpose IND AS Financial Statements of the Company as at and for the years ended 31st March 2022, 31st March 2021 and 31st March 2020, which were prepared by the Company after taking into consideration in response to the requirements of the SEBI e-mail and were approved by the Board of Directors at their Board meeting held on 27th March 2023. The Audited Special Purpose IND AS Financial Statements for the years ended 31st March 2022, 31st March 2021 and 31st March 2020 have been prepared after making suitable adjustments to the accounting heads from their Indian GAAP values following accounting policies (both mandatory exceptions and optional exemptions) availed as per Ind AS 101 for the transition date of 1st April, 2019 and as per the presentation, accounting policies and grouping/classifications followed as at and for the nine-months period ended 31st December 2022.
3. As at and for the years ended 31st March 2022, 31st March 2021 and 31st March 2020: From the audited financial statements of the Company as at and for the years ended 31st March 2022, 31st March 2021 and 31st March 2020 prepared in accordance with Indian GAAP which were approved by the Board of Directors in their meetings held on 27th June 2022, 6th September 2021 and 21st October 2020 respectively.
4. As at and for the year ended 31st March 2022 the financials has been prepared by the company in accordance with Indian GAAP and reaudited by the auditors, as the previous auditor was not required to undergo Peer Review and there was the requirement of reaudit as per the SEBI Guidelines. The same have been approved by the board of directors at their meeting held on 27th March 2023.
Pursuant to the Companies (Indian Accounting Standard) Second Amendment Rules, 2015, the Company will prepare its first set of statutory financial statements as per Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) for the year ended 31st March 2023 and consequently 1st April
2021 is the transition date for preparation of such statutory financial statements. The Special Purpose Interim Financial Statements for the nine-months period ended 31st December 2022 are the first financial statements prepared in accordance with Ind-AS. Up to the financial year ended 31st March 2022, the Company prepared its financial statements in accordance with accounting standards prescribed under Section 133 of the Companies Act, 2013 ("Indian GAAP").
In accordance with Ind AS 101 First-time Adoption of Indian Accounting Standards, the Company has presented an explanation of how the transition to Ind AS has affected the previously reported financial condition, financial performance and cash flows (Refer to Note 42 to Annexure VII).
These restated financial information were approved for issue by the Companys Board ofmn Directors on 1st April 2023.
B. Basis of Preparation:
The accounting policies set out below have been applied consistently to the periods presented in the Restated Financial Information. These Restated Financial Information have been prepared on a going concern basis.
C. Basis of Measurement:
The Restated Financial Information have been prepared on a historical cost basis, except for certain financial assets and liabilities measured at fair value or amortised cost method (refer accounting policy regarding financial instruments) or revalued amount.
D. Current and Non-Current Classification
The Company presents assets and liabilities in the balance sheet based on current/ non-current classification.
An asset is treated as current when it is:
? Expected to be realised or intended to be sold or consumed in normal operating cycle ? Held primarily for the purpose of trading ? Expected to be realised within twelve months after the reporting period, or ? Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period
All other assets are classified as non-current.
A liability is current when:
? It is expected to be settled in normal operating cycle ? It is held primarily for the purpose of trading
? It is due to be settled within twelve months after the reporting period, or
? There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period
The company classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities only.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The operating cycle of the Companys operations varies from contract to contract depending on the size of the contract and related approvals.
Accordingly, contract related assets and liabilities are classified into current and non-current based on the operating cycle of the contract. All other assets and liabilities have been classified into current and non-current based on a period of twelve months.
E. Functional and Presentation Currency
The Restated Financial Information has been presented in Indian Rupees ( or INR), which is also the Holding companys functional currency. All amounts have been rounded-off to the nearest millions and decimals thereof, unless otherwise mentioned.
F. Use of estimates, assumptions and judgements
The preparation of these Restated financial statements in conformity with the recognition and measurement principles of Ind AS requires, management to make judgements, estimates and assumptions that affect the reported balances of assets and liabilities, disclosures relating to contingent liabilities as at the date of the financial statements and the reported amounts of income and expenses for the years presented.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
Assumption and estimation uncertainties:
Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the amounts recognised in the Restated
Financial Information is included in the following notes:
Impairment test of non-financial assets and financials assets
Measurement of defined benefit obligations: key actuarial assumptions
Recognition of deferred tax assets: availability of future taxable profit against which tax losses carried forward can be used Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources
G. Fair value measurement
Certain accounting policies and disclosures of the Company require the measurement of fair values, for both financial and non financial assets and liabilities.
The Company has an established control framework with respect to the measurement of fair values.
The valuation team regularly reviews significant unobservable inputs and valuation adjustments.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:
- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
- Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
- Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
When measuring the fair value of an asset or a liability, the Company uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
1.2 Significant accounting policies
A. Property, plant and equipment
Recognition and Measurement
Property, plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Freehold land is stated at cost. The cost of an item of property, plant and equipment comprises: a) its purchase price, including non-refundable purchase taxes, after deducting trade discounts and rebates. b) any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by the management. c) the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment and depreciated accordingly.
Subsequent expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Company.
Depreciation methods, estimated useful lives and residual value
Depreciation is calculated on written down value basis using the useful lives as prescribed under
Schedule II to the Companies Act, 2013. If the managements estimate of the useful life of a property plant & equipment at the time of acquisition of the asset or of the remaining useful life on a subsequent review is shorter than that envisaged in the aforesaid schedule, depreciation is provided at a higher rate based on the managements estimate of the useful life/remaining useful life.
Assets |
Useful Life |
| Building & Property | 60 years |
| Furniture & Fixtures | 10 years |
| Plant & Equipment | 5 - 15 years |
| Computer & Peripherals | 3 years |
| Vehicles | 8 - 10 years |
| Leasehold Land and Improvements | Over Lease Period |
Depreciation on additions during the year is provided on pro rata basis with reference to month of addition/installation.
The property, plant and equipment acquired under finance leases is depreciated over the assets useful life or over the shorter of the assets useful life and the lease term if there is no reasonable certainty that the company will obtain ownership at the end of the lease term. Leasehold land is amortised on a straight-line basis over the balance period of lease. The residual values are not more than 5% of the original cost of the asset.
Derecognition
An item of property, plant and equipment and any significant part initially recognized is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the restated statement of profit and loss when the asset is derecognised.
B. Capital Work In Progress
Cost of assets not ready for intended use, as on balance sheet date is shown as capital work in progress. Advances given towards acquisition of property, plant and equipment outstanding at each balance sheet date are disclosed as other non-current assets.
C. Investment Property
Recognition and Measurement
Land and Building held to earn rental or for capital appreciation or both, rather than for use in the production or supply of goods or services or for administrative purposes: or sale in the ordinary course of business is recognised as investment property. Land held for a currently undetermined future use is also recognised as Investment Property. Investment property is measured initially at its cost, including related transaction costs and where applicable borrowing costs. Subsequent expenditure is capitalised to the assets carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognised.
Gain or Loss on Disposal
Any gain or loss on disposal of an Investment Property is recognised in the Restated Statement of Profit and loss.
D. Impairment
i. Impairment of financial assets
The Company recognises loss allowances for expected credit losses on: - financial assets measured at amortised cost; - contract assets recognised under contract with customers; and - financial assets measured at FOCI- debt investments.
At each reporting date, the Company assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired includes the following observable data: - significant financial difficulty of the borrower or issuer; - a breach of contract such as a default or being past due for 90 days or more;
- the restructuring of a loan or advance by each entity in the Company on terms that such entity would not consider otherwise; - it is probable that the borrower will enter bankruptcy or other financial reorganisation; - the disappearance of an active market for a security because of financial difficulties.
The Company measures loss allowances at an amount equal to lifetime expected credit losses, except for bank balances for which credit risk (i.e. the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition, which are measured as 12 month expected credit losses.
Loss allowances for trade receivables are always measured at an amount equal to lifetime expected credit losses. Lifetime expected credit losses are the expected credit losses that result from all possible default events over the expected life of a financial instrument. Twelve months expected credit losses are the portion of expected credit losses that result from default events that are possible within 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).
In all cases, the maximum period considered when estimating expected credit losses is the maximum contractual period over which the Company is exposed to credit risk. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating expected credit losses, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Companies historical experience and informed credit assessment and including forward-looking information.
ii. Impairment of non-financial assets
The Companies non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the assets recoverable amount is estimated.
For impairment testing, assets that do not generate independent cash inflows are grouped together into cash-generating units (CGUs). Each GU represents the smallest group of assets that generates cash inflows that are largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of a CGU (or an individual asset) is the higher of its value in use and its fair value less costs to sell. Value in use is based on the estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the GU (or the asset).
The Companies assets (e.g., central office building for providing support to various CGUs) do not generate independent cash inflows. To determine impairment of a corporate asset, recoverable amount is determined for the CGUs to which the corporate asset belongs.
An impairment loss is recognised if the carrying amount of an asset or GU exceeds its estimated recoverable amount. Impairment losses are recognised in the Revised Restated Statement of Profit and Loss. Impairment loss recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to the GU, and then to reduce the carrying amounts of the other assets of the CGU (or group of CGUs) on a pro rata basis.
In respect of other assets for which impairment loss has been recognised in prior periods, the Company reviews at each reporting date whether there is any indication that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. Such a reversal is made only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
E. Inventories
Inventories include finished goods, raw materials and Work in Progress. The inventory is valued at cost or Net Realisable Value, whichever is lower. Cost is ascertained on weighted average basis. The cost of inventory include expenditure in purchasing the materials, production and conversion cost and other relevant costs incurred in bringing them to their present location and condition.
Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale.
F. Financial Instruments i. Financial assets
Initial recognition and measurement
Financial assets are recognised when, and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial assets at initial recognition. When financial assets are recognised initially, they are measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition.
Classification: a. Cash and Cash Equivalents
Cash comprises cash/cheques on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investment that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. b. Debt Instruments
The Company classifies its debt instruments, as subsequently measured at amortised cost or fair value through Other Comprehensive Income or fair value through profit or loss based on its business model for managing the financial assets and the contractual cash flow characteristics of the financial asset i. Financial assets at amortised cost
Financial assets are subsequently measured at amortised cost if these financial assets are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. Interest income from these financial assets is included as a part of the
Companys income in the Statement of Profit and Loss using the effective interest rate method. ii. Financial assets at fair value through Other Comprehensive Income (FVOCI) Financial assets are subsequently measured at fair value through Other Comprehensive Income if these financial assets are held for collection of contractual cash flows and for selling the financial assets, where the assets cash flows represent solely payments of principal and interest. Movements in the carrying value are taken through Other Comprehensive Income, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains or losses which are recognised in the Statement of Profit and Loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in Other Comprehensive Income is reclassified from Other Comprehensive Income to the Statement of Profit and Loss. iii. Financial assets at fair value through profit or loss (FVTPL)
Assets that do not meet the criteria for amortised cost or FVOCI are measured at fair value through profit or loss. A gain or loss on such debt instrument that is subsequently measured at FVTPL and is not part of a hedging relationship as well as interest income is recognised in the Statement of Profit and Loss. c. Equity Instruments
The Company subsequently measures all equity investment (other than the investments in subsidiaries, joint ventures and associates which are measured at cost) at fair value. Where the Company has elected to present fair value gains and losses on equity investments in Other Comprehensive Income ("OCI"), there is no subsequent reclassification of fair value of gains and losses to profit or loss. Dividends from such investments are recognised in the Statement of
Profit and Loss as other income when the Companys right to receive payment is established. The Company has made an irrecoverable election to present in Other Comprehensive Income subsequent changes in the fair value of equity investments that are not held for trading (except investments in subsidiaries, joint ventures and associates which are measured at cost). When the equity investment is de-recognised, the cumulative gain or loss previously recognised in Other Comprehensive Income is reclassified from Other Comprehensive Income to the Retained Earnings directly.
De-recognition
A financial asset is de-recognised only when the Company has transferred the rights to receive cash flows from the financial asset. Where the Company has transferred an asset, the Company evaluates whether it has transferred substantially all risks and rewards of ownership of the financial asset. In such cases, the financial asset is de-recognised. Where the Company has not transferred substantially all risks and rewards of ownership of the financial asset, the financial asset is not de-recognised. Where the Company retains control of the financial asset, the asset is continued to be recognised to the extent of continuing involvement in the financial asset.
ii. Financial liabilities Initial recognition and measurement
Financial liabilities are recognised when and only when, the Company becomes a party to the contractual provisions of the financial instrument. The Company determines the classification of its financial liabilities at initial recognition. All financial liabilities are recognised initially at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial liabilities, which are not at fair value through profit or loss, are adjusted to the fair value on initial recognition.
Subsequent measurement
After initial recognition, financial liabilities that are not carried at fair value through profit or loss are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in the Statement of Profit and Loss when the liabilities are derecognised, and through the amortisation process
De-recognition
A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the Statement of Profit and Loss.
Equity Instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a Company are recognised at the proceeds received.
G. Borrowing costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation. Other borrowing costs are expensed in the period in which they are incurred.
H. Cash and Cash Equivalent
Cash and cash equivalent includes cash on hand, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.
I. Restated Statement of Cash Flows
Cash flows are reported using the indirect method, whereby net profit before taxes for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Company are segregated.
J. Earnings per share Basic earnings per share
Basic earnings per share is calculated by dividing: - the profit attributable to owners of the company
- by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements in equity shares issued.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account: - the profit attributable to owners of the company - the weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.
K. Revenue Recognition
Revenue from contracts with customer
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company assesses promises in the contract that are separate performance obligations to which a portion of transaction price is allocated. Revenue is measured based on the transaction price as specified in the contract with the customer. It excludes taxes or other amounts collected from customers in its capacity as an agent. In determining the transaction price, the Company considers below, it any:
a. Variable consideration - This includes bonus, incentives, discounts etc. It is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognised will not occur when the associated uncertainty with the variable consideration is subsequently resolved. It is reassessed at end of each reporting period.
b. Significant financing component - Generally, the Company receives short-term advances from its customers. Using the practical expedient in Ind AS 115, the Company does not adjust the promised amount of consideration for the effects of a significant financing component if it expects, at contract inception, that the period between the transfer of the promised good or service to the customer and when the customer pays for that good or service will be one year or less. c. Consideration payable to a customer - Such amounts are accounted as reduction of transaction price and therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the Company. In accordance with Ind AS 37, the Company recognises a provision for onerous contract when the unavoidable costs of meeting the obligations under a contract exceed the economic benefits to be received.
Contract modifications
Contract modifications are accounted for when additions, deletions or changes are approved either to the contract scope or contract price. The accounting for modifications of contracts involves assessing whether the services added to the existing contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catch up basis, while those that are distinct are accounted for prospectively, either as a separate contract, if additional services are priced at the standalone selling price, or as a termination of existing contract and creation of a new contract if not priced at the standalone selling price.
Cost to fulfill the contract
The Company recognises asset from the cost incurred to fulfill the contract such as set up and mobilisation costs and amortises it over the contract tenure on a systematic basis that is consistent with the transfer to the customer of the goods or services to which the asset relates. Contract balances Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs its obligations by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. The contract assets are transferred to receivables when the rights become unconditional. This usually occurs when the Company issues an invoice to the Customer.
Trade receivables
A receivable represents the Companies right to an amount of consideration that is unconditional ie. only the passage of time is required before payment of consideration is due.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Company has received consideration (or an amount of consideration is due) from the customer. Contract liabilities are recognised as revenue when the Company performs under the contract.
The accounting policies for the specific revenue streams of the Company are summarised below: i. Sale of products
Revenue from the sale of products is recognised at point in time when the control of the goods is transferred to the customer based on contractual terms i.e. either on dispatch of goods or on delivery of the products at the customers location. ii. Construction contracts
Revenue, where the performance obligation is satisfled over time is recognised in proportion to the stage of completion of the contract. The stage of completion is assessed by reference to surveys of work performed. Otherwise, contract revenue is recognised as an expense in the Revised Restated statement of Profit and Loss in accounting periods in which work to which they relate is performed. An expected loss on a contract is recognised immediately in the Revised restated Financial Statement of Profit and Loss. The Company recognises revenue at an amount for which it has right to consideration (i.e. right to invoice) from customer that corresponds directly with the value of the performance completed to the date. Contract revenue includes the initial amount agreed in the contract plus any variations in contract work and claims payments, to the extent that it is probable that they will result in revenue and can be measured reliably. The Company recognises bonus/ incentive revenue on early completion of the project upon acceptance of the corresponding claim by the Customer. iii. Job work income
Job work income is recognized when the services are rendered and there are no uncertainties involved to its ultimate realization. iv. Interest income
Interest income, including income arising from other financial instruments measured at amortised cost, is recognised using the effective interest rate method. v. Dividend income
Revenue is recognised when the companys right to receive the payment is established, when it is probable that the economic benefits associated with the dividend will flow to the entity and the amount of dividend can be reliably measured. This is generally when shareholders approve the dividend. vi. Rental Income
Lease income from operating leases where the Company is a lessor is recognized as income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature. vii. Revenue in respect of other income is recognised when no significant uncertainty as to its determination or realisation exists.
L. Leases
In accordance with IND AS 116, the Company recognises a right of use asset and a lease liability at the lease commencement date. The right of use asset is initially measured at cost which comprise the initial amount of lease liability adjusted for any lease payments made before the commencement date. The right of use asset is subsequently depreciated using the straight-line method of the balance lease term. In addition, the right of use asset is periodically reduced by impairment loss, if any and adjusted for certain remeasurements of lease liability. The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the implicit rate in the lease or the incremental borrowing rate, if that rate cannot be readily available at the commencement date of the lease for the estimated term of the obligation. Lease payments included in the measurement of the lease liability comprise the amounts expected to be payable over the period of lease. The lease liability is measured at amortised cost using effective interest rate method. It is remeasured when there is a change in future lease payments arising from change in the index or rate. The Company has applied the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option) and low-value assets recognition exemption.
M. Joint Arrangements
Under Ind AS 111 Joint arrangements, investments in joint arrangements are classified as either joint operations or joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint arrangement. The Company has joint operations.
Joint Operations
The company recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial statements under the appropriate headings. The details of joint operations are set out in note 38.
N. Employee benefits
(i) During Employment benefits Short term employee benefits
Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.
(ii) Post Employment benefits (a) Defined contribution plans
A defined contribution plan is a post employment benefit plan under which a Company pays fixed contribution into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are expensed as the related service is provided. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available.
(b) Defined benefit plans
The Company pays gratuity to the employees who have has completed five years of service with the Company at the time when employee leaves the Company. The gratuity liability amount is unfunded and formed exclusively for gratuity payment to the employees. The liability in respect of gratuity and other post-employment benefits is calculated using the Projected Unit Credit Method and spread over the periods during which the benefit is expected to be derived from employees services. Re-measurement of defined benefit plans in respect of post employment are charged to Other Comprehensive Income. Compensated Absences : Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year are treated as short term employee benefits. The obligation towards the same is measured at the expected cost of accumulated compensated absences as the additional amount expected to be paid as a result of the unused entitlement as at the year end.
(iii) Termination benefits
Termination benefits are payable when employment is terminated by the Company before the normal retirement date or when an employee accepts voluntary redundancy in exchange for these benefits. In case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer.
O. Taxes i. Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the company operates and generates taxable income. Current income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Current tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
ii. Deferred tax
Deferred income tax is recognised using the balance sheet approach, deferred tax is recognised on temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. Deferred income tax assets are recognised for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
P. Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources, that can be reliably estimated, will be required to settle such an obligation. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows to net present value using an appropriate pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Unwinding of the discount is recognised in the Statement of Profit and Loss as a finance cost. Provisions are reviewed at each reporting date and are adjusted to reflect the current best estimate. A present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is disclosed as a contingent liability. Contingent liabilities are also disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non -occurrence of one or more uncertain future events not wholly within the control of the Company.
Claims against the Company where the possibility of any outflow of resources in settlement is remote, are not disclosed as contingent liabilities. Contingent assets are not recognised in financial statements since this may result in the recognition of income that may never be realised. However, when the realisation of income is virtually certain, then the related asset is not a contingent asset and is recognised.
Q. Operating Segment
The company is exclusively engaged in the business of construction and infrastructure development in India. Based on the management approach, the Chief Operating Decision Maker evaluates the companys performance and allocates the resources based on an analysis of overall performance indicators. The Company prepares its segment information in conformity with the accounting policies adopted for preparing and presenting the restated financial information of the Company.
PRINCIPAL COMPONENTS OF STATEMENT OF PROFIT AND LOSS
Set forth below are the principal components of statement of profit and loss from our continuing operations:
Income
Our total income comprises of (i) revenue from operations and (ii) other income.
Revenue from Operations
Revenue from operations comprises of: (i) sale of services which includes work contract services; (ii) sale of products and (iii) other operating revenue comprising of technical and professional services.
Other Income
Other income includes (i) interest income, (ii) rent income, (iii) other income and (iv) profit on sale of property, plant & equipment
Expenses
Our expenses comprises of: (i) purchase cost; (ii) construction expenses; (iii) changes in inventories; (iv) employee benefits expense; (iv) finance costs; (v) depreciation and amortisation expense; and (vi) other expenses.
Purchase Cost
Purchase cost denotes the cost of materials purchased during the year/period.
Construction Expenses
Construction Expenses include: (i) sub-contract charges;(ii) hire/rent charges for equipment; (iii) drawing, design and survey expenses; (iv) power, fuel and water expense; (v) site expense; (vi) testing and quality control; (vii) royalty expenses; (viii) tender fees; (ix) transportation expenses; (x) labour welfare cess; and (xi) other expenses.
Changes in Inventories
Changes in inventories denote the difference between opening and closing balance of work in progress. The Company does not have any other items of inventory during the reported period.
Employee Benefits Expense
Employee benefits expenses primarily include (i) salary and wages, (ii) contribution to employee benefits (gratuity, provident fund and other funds) and (iii) staff welfare expenses.
Finance Cost
Finance cost includes (i) bank interest; (ii) other interest and (iii) other borrowing cost.
Depreciation and Amortisation expenses
Depreciation and amortisation expenses primarily include depreciation expenses on our property, plant and equipment.
Other Expenses
Other expenses include (i) audit fees; (ii) insurance expenses; (iii) bank charges; (iv) repair and maintenance expenses;(v) donation expenses;(vi) corporate social responsibility expenses; (vii) loss on sale of property, plant and equipment; (viii) postage, printing and courier charges;(ix) telephone and internet expenses; (x) travelling expenses; (xi) advertisement expenses; (xii) professional and consultancy fees; (xiii) office and administrative expenses; (xiv) rent and lease; (xv) road tax and toll tax; (xvi) bad debts written off; (xvii) miscellaneous expenses; (xviii) rates and taxes; (xix) goods and service tax written off; and (xx) allowance for expected credit loss.
Our Results of Operations
The following table sets forth selective financial data from our restated statement of profit & loss for the nine months period ended December 31, 2022 and for the financial years ended March 31, 2022, 2021 and 2020, the components of which are also expressed as a percentage of total income for such periods:
( in Million unless stated otherwise)
Restated Results for the Nine months period ended |
Restated Results for the Year ended March 31, |
Restated Results for the Year ended March 31, |
Restated Results for the Year ended March 31, |
|||||
Particulars |
December 31, 2022 Amount | % of total income | 2022 Amount | % of total income | Amount |
2021 % of total income | 2020 Amount | % of total income |
Income: |
||||||||
| Revenue from operations | 7,127.01 | 99.78% | 7,856.13 | 99.77% | 4,857.31 | 99.60% | 3,731.51 | 99.40% |
| Other income | 15.72 | 0.22% | 17.74 | 0.23% | 19.42 | 0.40% | 22.42 | 0.60% |
Total Income |
7,142.73 | 100.00% | 7,873.87 | 100.00% | 4,876.73 | 100.00% | 3,753.93 | 100.00% |
Expenses: |
||||||||
| Purchase Cost | 3,300.08 | 46.20% | 3,456.23 | 43.89% | 1,473.95 | 30.22% | 1,215.00 | 32.37% |
| Construction Expenses | 4,045.14 | 56.63% | 4,001.26 | 50.82% | 2,786.66 | 57.14% | 2,154.02 | 57.38% |
| Changes in Inventories | -1,422.61 | -19.92% | -714.75 | -9.08% | -37.01 | -0.76% | -183.88 | -4.90% |
| Employee benefits expense | 185.81 | 2.60% | 149.71 | 1.90% | 100.87 | 2.07% | 95.42 | 2.54% |
| Finance costs | 204.78 | 2.87% | 240.73 | 3.06% | 175.40 | 3.60% | 176.46 | 4.70% |
Depreciation & amortization expenses |
48.88 | 0.68% | 41.87 | 0.53% | 41.03 |
0.84% | 41.73 | 1.11% |
| Other expenses | 96.34 | 1.35% | 95.01 | 1.21% | 79.05 | 1.62% | 71.62 | 1.91% |
Total Expenses |
6,458.42 | 90.42% | 7,270.06 | 92.33% | 4,619.95 | 94.73% | 3,570.37 | 95.11% |
Profit before exceptional items and taxes |
684.31 | 9.58% | 603.81 | 7.67% | 256.78 |
5.27% | 183.56 | 4.89% |
| Exceptional Items | - | 0.00% | - | 0.00% | - | 0.00% | - | 0.00% |
Profit/ (Loss) before tax |
684.31 | 9.58% | 603.81 | 7.67% | 256.78 | 5.27% | 183.56 | 4.89% |
| Tax expense: | ||||||||
| (i) Current tax | 172.10 | 2.41% | 154.13 | 1.96% | 67.17 | 1.38% | 58.72 | 1.56% |
| (ii) Deferred tax | 4.86 | 0.07% | 1.21 | 0.02% | (0.21) | 0.00% | (1.71) | -0.05% |
| Total Tax Expense | 176.96 | 2.48% | 155.34 | 1.98% | 66.96 | 1.38% | 57.01 | 1.51% |
Profit/ (Loss) for the year/period |
507.35 | 7.10% | 448.47 | 5.70% | 189.82 |
3.89% | 126.55 | 3.37% |
Other Comprehensive |
||||||||
Income |
||||||||
Financial Instruments through other comprehensive income |
0.24 | 0.00% | 0.04 | 0.00% | 0.15 |
0.00% | 0.09 | 0.00% |
| Deferred tax on revaluation of financial instruments | -0.03 | 0.00% | -0.00 | 0.00% | -0.02 | 0.00% | -0.01 | 0.00% |
| Gain on sale of equity instruments through other comprehensive income | - | 0.00% | 0.18 | 0.00% | 0.27 | 0.01% | - | 0.00% |
| Re-measurement of defined employee benefit | 1.73 | 0.02% | 2.07 | 0.03% | 0.73 | 0.01% | 1.29 | 0.03% |
Total Other |
||||||||
Comprehensive Income / (Loss) for the year/period |
1.94 | 0.03% | 2.29 | 0.03% | 1.13 | 0.02% | 1.37 | 0.04% |
Total Comprehensive Income (Loss) for the year/period |
509.29 | 7.13% | 450.76 | 5.72% | 190.95 | 3.92% | 127.92 | 3.41% |
Review of Results of Operations for the nine months period ended December 31, 2022
Total Income
Our total income amounted to 7,142.73 million for the nine months period ended December 31, 2022 which was on account of revenue from operations and other income as described below:
Revenue from operations
Our revenue from operations was 7,127.01 million which was 99.78 % of the total income for the nine months period ended December 31, 2022.
Other income
Our other income amounted to 15.72 million representing 0.22 % of our total income for the nine months period ended December 31, 2022.
Expenses
Our total expenses, excluding tax amounted to 6,458.42 million for the nine months period ended December 31, 2022 representing 90.42 % of our total income.
Cost of Construction
Our cost of construction represents 82.92% of the total income for the nine months period ended December 31, 2022.
Purchase Cost
Our purchase cost was 3,300.08 million representing 46.20 % of the total income for the nine months period ended December 31, 2022.
Changes in inventories
Our change in inventories of work in progress was -1,422.61 million representing 19.92 % of our total income for the nine months period ended December 31, 2022.
Employee benefits expenses
Our employee benefits expenses was 185.81 million representing 2.60 % of our total income for the nine months period ended December 31, 2022.
Finance costs
Our finance costs was 204.78 million representing 2.87 % of our total income for the nine months period ended December 31, 2022, which was solely on account of interest on borrowings (term loans and working capital loans) availed by our Company.
Depreciation & amortization
Our depreciation & amortization expenses was 48.88 million representing 0.68 % of our total income for the nine months period ended December 31, 2022.
Other expenses
Our other expenses was 96.34 million representing 1.35 % of our total income for the nine months period ended December 31, 2022.
Profit before tax
Our profit before tax was 684.31 million representing 9.58 % of our total income for the nine months period ended December 31, 2022.
Tax expenses
Our tax expense for the nine months period ended December 31, 2022 was Rs 176.96 million representing 2.48 % of our total income for the nine months period ended December 31, 2022. It was mainly on account of current tax of Rs 172.10 million and deferred tax of Rs 4.86 million.
Profit after tax
Due to the above-mentioned reasons, our profit after tax was 507.35 million representing 7.10 % of our total income for the nine months period ended December 31, 2022.
Other Comprehensive Income
Our other comprehensive income was 1.94 million representing 0.03 % of our total income for the nine months period ended December 31, 2022.
Total Comprehensive Income
Due to the above-mentioned reasons, our total comprehensive income was 509.29 million representing 7.13 % of our total income for the nine months period ended December 31, 2022.
RESULTS OF OPERATIONS INFORMATION FOR THE FINANCIAL YEAR ENDED MARCH 31, 2022 COMPARED WITH FINANCIAL YEAR ENDED MARCH 31, 2021
( in Million unless stated otherwise)
Particulars |
Financial Year ended March 31, 2022 | Financial Year ended March 31, 2021 | Change in million | Change in % |
Income: |
||||
| Revenue from operations | 7,856.13 | 4,857.31 | 2,998.82 | 61.74% |
| Other income | 17.74 | 19.42 | -1.68 | -8.65% |
Total Income |
7,873.87 | 4,876.73 | 2,997.14 | 61.46% |
Expenses: |
||||
| Purchase Cost | 3,456.23 | 1,473.95 | 1,982.28 | 134.49% |
| Construction Expenses | 4,001.26 | 2,786.66 | 1,214.60 | 43.59% |
| Changes in Inventories | -714.75 | -37.01 | -677.74 | -1831.23% |
| Employee benefit expenses | 149.71 | 100.87 | 48.84 | 48.42% |
| Finance costs | 240.73 | 175.40 | 65.33 | 37.25% |
| Depreciation & amortization expenses | 41.87 | 41.03 | 0.84 | 2.05% |
| Other expenses | 95.01 | 79.05 | 15.96 | 20.19% |
Total Expenses |
7,270.06 | 4,619.95 | 2,650.11 | 57.36% |
| Profit before exceptional items and taxes | 603.81 | 256.78 | 347.03 | 135.15% |
| Exceptional Items | - | - | - | 0.00% |
Profit/ (Loss) before tax |
603.81 | 256.78 | 347.03 | 135.15% |
| Tax expense: | ||||
| (i) Current tax | 154.13 | 67.17 | 86.96 | 129.46% |
| (ii) Deferred tax | 1.21 | -0.21 | 1.42 | -676.19% |
| Total Tax Expense | 155.34 | 66.96 | 88.38 | 131.99% |
Profit/ (Loss) for the year |
448.47 | 189.82 | 258.65 | 136.26% |
Other Comprehensive Income |
||||
| Financial Instruments through other comprehensive income | 0.04 | 0.15 | -0.11 | -73.33% |
| Deferred tax on revaluation of financial instruments | 0.00 | -0.02 | 0.02 | 100% |
| Gain on sale of equity instruments through other comprehensive income | 0.18 | 0.27 | -0.09 | -33.33% |
| Re-measurement of defined employee benefit | 2.07 | 0.73 | 1.34 | 183.56% |
Total Other Comprehensive Income / (Loss) for the year |
2.29 | 1.13 | 1.16 | 102.65% |
Total Comprehensive Income (Loss) for the year |
450.76 | 190.95 | 259.81 | 136.06% |
Total Income
Our total income has increased by 61.46% to 7,873.87 Million in Financial Year ended March 31,
2022 from 4,876.73 Million in Financial Year ended March 31, 2021 primarily due to overall increase in the revenue from operations.
Revenue from Operations
Our revenue from operations increased significantly by 61.74% to 7,856.13 Million in Financial Year ended March 31, 2022 from 4,857.31 Million in Financial Year ended March 31, 2021 attributable as follows:
? Sales of services relating to work contract services increased by 61.33% from 4,844.49 million in Financial Year ended March 31, 2021 to 7,815.56 million in Financial Year ended March 31, 2022. The increase was mainly attributable to increased revenue from our
Water Supply segment from 3,839.05 million in Financial Year ended March 31, 2021 to
6,740.41 million in Financial Year ended March 31, 2022 representing a growth of 75.58%.
? The balance increase in revenue from operations was attributable to increase in sale of products by 23.71 million and rise in technical services by 4.03 million.
Other Income
Our other income was 17.74 million in Financial Year ended March 31, 2022 as compared to 19.42 million in Financial Year ended March 31, 2021, which has decreased by 8.65% primarily because of lower interest income earned in Financial Year ended March 31, 2022 as compared to Financial Year ended March 31, 2021.
Total Expenses
Our total expenses have also increased by 57.36% to 7,270.06 million in Financial Year ended March 31, 2022 from 4,619.95 million in Financial Year ended March 31, 2021. This increase was principally due to 1,982.28 million increase in purchase cost, 1,214.60 million increase in construction cost, 677.74 million decrease in changes in inventories of work in progress, 48.84 million increase in employee benefit expenses, 65.33 million increase in finance costs, 0.84 million increase in depreciation and amortization expenses and 15.96 million increase in other expenses.
Cost of Construction
Cost of Construction represents sum of purchase cost, construction expenses and changes in inventories. Cost of construction has increased by 59.64% from Financial Year ended March 31, 2021 to Financial Year ended March 31, 2022. However as a percentage of total income, the cost of construction has declined by 97 basis points indicating operational efficiency in our overall operations. The change in absolute numbers of cost construction is as follows:
Purchase Cost
The purchase cost has increased by 134.49% to 3,456.23 million in Financial Year ended March 31, 2022 from 1,473.95 Million in Financial Year ended March 31, 2021. This increase was primarily due to higher purchase of raw material on account of corresponding increase in our construction activity with respect to our on-going projects in Financial Year ended March 31, 2022.
Construction Expenses
Construction expenses increased by 43.59% to 4,001.26 million in Financial Year ended March 31, 2022 from 2,786.66 million in Financial Year ended March 31, 2021. This increase was primarily on account of increase in (i) sub-contracting charges of 1,123.05 million; (ii) drawing, design and survey expenses of 28.00 million; (iii) power, fuel and water expenses of 32.73 million and (iv) labour welfare cess of 26.14 million.
Changes in Inventories
The change in inventories of work in progress was at -714.75 million as at the end of March
31, 2022 as compared to -37.01 million as at the end of March 31, 2021, a decrease of 1831.23%. This was primarily because of an increase in the stock of inventories at the various project sites at the end of Financial Year ended March 31, 2022.
Employee benefits expense
Employee benefits expenses increased by 48.42% from 100.87 million in Financial Year ended March 31, 2021 to 149.71 million in Financial Year ended March 31, 2022. This increase was primarily attributable to an increase in salaries and wages as a result of an increase in the number of employees in Financial Year ended March 31, 2022.
Finance cost
Finance cost has increased by 37.25% to 240.73 million in Financial Year ended March 31, 2022 from 175.40 Million in Financial Year ended March 31, 2021 on account of increase in borrowings, availed to meet the capital needs of the various projects that have been undertaken by us in Financial Year ended March 31, 2022.
Depreciation and amortization expenses
Depreciation and amortisation expense increased by 2.05 % to 41.87 million in Financial Year ended March 31, 2022 from 41.03 million in Financial Year ended March 31, 2021.
Other expenses
Other expenses increased by 20.19% to 95.01 million in Financial Year ended March 31, 2022 from
79.05 million in Financial Year ended March 31, 2021. This was primarily due to increase in overall expenses by 18.63 million, supplemented by a major increase in professional and consultancy fees by 12.26 million offset by decrease in expenses owing to write off of Goods and Service Tax balance amounting to 14.92 million.
Profit Before Tax
Profit before tax has significantly increased by 135.15% to 603.81 million in Financial Year ended March 31, 2022 from 256.78 million in Financial Year ended March 31, 2021 This represents an increase of 2.40% on total income.
Tax Expenses
Due to an increase in our profit before tax, our current tax expense increased by 129.46% from 67.17 million in Financial Year ended March 31, 2021 to 154.13 million in Financial Year ended March 31, 2022 and our deferred tax expense was 1.21 million in Financial Year ended March 31,
2022, as compared to -0.21 million in Financial Year ended March 31, 2021.
Profit After Tax
For the various reasons discussed above, we recorded an increase of 136.26% in profit after tax from 189.82 million in Financial Year ended March 31, 2021 to 448.47 million in Financial Year ended March 31, 2022.
Other Comprehensive Income
We recorded 2.29 million as other comprehensive income for Financial Year ended March 31, 2022 as compared to 1.13 million in Financial Year ended March 31, 2021 which was primarily due to an increase in re-measurements of defined employee benefits, not to be classified in subsequent periods.
Total Comprehensive Income
Total comprehensive income increased by 136.06 % to 450.76 million in Financial Year ended March 31, 2022 as compared to 190.95 million in Financial Year ended March 31, 2021, as a result of the factors described above.
RESULTS OF OPERATIONS INFORMATION FOR THE FINANCIAL YEAR ENDED MARCH 31, 2021 COMPARED WITH FINANCIAL YEAR ENDED MARCH 31, 2020
(Rs in Million unless stated otherwise)
Particulars |
Financial Year ended March 31, 2021 | Financial Year ended March 31, 2020 | Change in million | Change in % |
Income: |
||||
| Revenue from operations | 4,857.31 | 3,731.51 | 1,125.80 | 30.17% |
| Other income | 19.42 | 22.42 | -3.00 | -13.38% |
Total Income |
4,876.73 | 3,753.93 | 1,122.80 | 29.91% |
Expenses: |
||||
| Purchase Cost | 1,473.95 | 1,215.00 | 258.95 | 21.31% |
| Construction Expenses | 2,786.66 | 2,154.02 | 632.64 | 29.37% |
| Changes in Inventories | -37.01 | -183.88 | 146.87 | 79.87% |
| Employee benefit expenses | 100.87 | 95.42 | 5.45 | 5.71% |
| Finance costs | 175.40 | 176.46 | -1.06 | -0.60% |
| Depreciation & amortization expenses | 41.03 | 41.73 | -0.70 | -1.68% |
| Other expenses | 79.05 | 71.62 | 7.43 | 10.37% |
Total Expenses |
4,619.95 | 3,570.37 | 1,049.58 | 29.40% |
| Profit before exceptional items and taxes | 256.78 | 183.56 | 73.22 | 39.89% |
| Exceptional Items | - | - | - | 0.00% |
Profit/ (Loss) before tax |
256.78 | 183.56 | 73.22 | 39.89% |
| Tax expense: | ||||
| (i) Current tax | 67.17 | 58.72 | 8.45 | 14.39% |
| (ii) Deferred tax | -0.21 | -1.71 | 1.50 | -87.72% |
| Total Tax Expense | 66.96 | 57.01 | 9.95 | 17.45% |
Profit/ (Loss) for the year |
189.82 | 126.55 | 63.27 | 50.00% |
Other Comprehensive Income |
||||
| Financial Instruments through other comprehensive income | 0.15 | 0.09 | 0.06 | 66.67% |
| Deferred tax on revaluation of financial instruments Gain on sale of equity | -0.02 | -0.01 | -0.01 | 100.00% |
| instruments through other comprehensive income | 0.27 | 0.00 | 0.27 | - |
| Re-measurement of defined employee benefit | 0.73 | 1.29 | -0.56 | -43.41% |
Total Other Comprehensive Income / (Loss) for the year |
1.13 | 1.37 | -0.24 | -17.52% |
Total Comprehensive Income (Loss) for the year |
190.95 | 127.92 | 63.03 | 49.27% |
Total Income
Our total income has increased by 29.91% to 4,876.73 million in Financial Year ended March 31,
2021 from 3,753.93 million in Financial Year ended March 31, 2020 primarily due to an increase in revenue from operations by 1,125.80 million, partially offset by decrease in other income by 3.00 million.
Revenue from Operations
Our revenue from operations increased by 30.17% to 4,857.31 million in Financial Year ended March 31, 2021 from 3,731.51 million in Financial Year ended March 31, 2020 attributable as follows: ? Sale of services comprising of work contract services increased by 30.20% from 3,720.93 million in Financial Year ended March 31, 2020 to 4,844.49 million in Financial Year ended March 31, 2021. The increase was mainly attributable to increased revenue from our
Water Supply segment from 2,584.37 million in Financial Year ended March 31, 2020 to
3,839.05 million in Financial Year ended March 31, 2021 representing a growth of 48.55% and our railways segment from 593.25 million in Financial Year ended March 31, 2020 to
804.67 million in Financial Year ended March 31, 2021 representing a growth of 35.64%.
? The balance increase in revenue from operations was attributable to increase in sale of products by 2.25 million.
Other Income
Our other income decreased by 13.38% to 19.42 million in Financial Year ended March 31, 2021 from 22.42 million in Financial Year ended March 31, 2020, mainly due to decrease in interest income by 1.24 million and decrease in other income by 1.71 million.
Total Expenses
Our total expenses increased by 29.40% to 4,619.95 million in Financial Year ended March 31,
2021 from 3,570.37 million in Financial Year ended March 31, 2020. This increase was principally due to 258.95 million increase in purchase cost, 632.64 million increase in construction cost, 146.87 million increase in changes in inventories of work in progress, 5.45 million increase in employee benefit expenses, 1.06 million decrease in finance costs, 0.70 million decrease in depreciation and amortization expenses and 7.43 million increase in other expenses.
Cost of Construction
Cost of Construction represents sum of purchase cost, construction expenses and changes in inventories. Cost of construction has increased by 32.60% from Financial Year ended March 31, 2020 to Financial Year ended March 31, 2021. However as a percentage of total income, the cost of construction has declined by 176 basis points indicating operational efficiency in our overall operations. The change in absolute numbers of cost of construction is as follows:
Purchase Cost
Purchase cost increased by 21.31% to 1,473.95 million in Financial Year ended March 31, 2021 from 1,215.00 million in Financial Year ended March 31, 2020. The increase is due to the significant purchases of materials to meet the demand of construction activity in Financial Year ended March 31, 2021.
Construction Expenses
Construction Expenses increased by 29.37% from 2,154.02 million in Financial Year ended March 31, 2020 to 2,786.66 million in Financial Year ended March 31, 2021. This increase was primarily on account of increase in (i) sub-contracting charges of 596.28 million; (ii) power, fuel and water expenses of 16.32 and (iii) labour welfare cess of 17.08 million.
Changes in inventories
Changes in inventories of work in progress increased by 79.87% to -37.01 million in Financial Year ended March 31, 2021 from -183.88 million in Financial Year ended March 31, 2020 due to a decrease in inventory levels at the end of Financial Year ended March 31, 2021 as compared to Financial Year ended March 31, 2020.
Employee benefits expenses
Employee benefits expenses increased by 5.71% to 100.87 million in Financial Year ended March 31, 2021 from 95.42 million in Financial Year ended March 31, 2020. This increase was primarily attributable to an increase in salaries and wages as a result of an increase in the number of employees in Financial Year ended March 31, 2021 compared to Financial Year ended March 31, 2020.
Finance cost
Finance cost has decreased marginally by 0.60 % to 175.40 million in Financial Year ended March 31, 2021 from 176.46 million in Financial Year ended March 31, 2020.
Depreciation and amortization expenses
Depreciation and amortisation expense decreased by 1.67% to 41.03 million in Financial Year ended March 31, 2021 from 41.73 million in Financial Year ended March 31, 2020.
Other expenses
Other expenses increased by 10.36% to 79.05 million in Financial Year ended March 31, 2021 from
71.62 million in Financial Year ended March 31, 2020. This was primarily on account of increase in repairs and maintenance expenses by 6.78 million, corporate and social responsibility expenses by 2.34 million, rates and taxes by 2.67 million and write off of Goods and Service Tax by 6.23 million, offset by decrease in miscellaneous expenses by 5.71 million and in allowance for expected credit loss by 5.57 million.
Profit Before Tax
Profit before tax has significantly increased by 39.89% to 256.78 million in Financial Year ended March 31, 2021 from 183.56 million in Financial Year ended March 31, 2020. This represents a growth of 0.38% on total income.
Tax Expenses
Due to an increase in our profit before tax, our current tax expense increased by 14.39% from 58.72 million in Financial Year ended March 31, 2020 to 67.17 million in Financial Year ended March 31, 2021 and our deferred tax expense was -0.21 million in Financial Year ended March 31, 2021, as compared to -1.71 million in Financial Year ended March 31, 2020.
Profit After Tax
We recorded significant increase of 50.00% in profit after tax from 126.55 million in Financial Year ended March 31, 2020 to 189.82 million in Financial Year ended March 31, 2021 for the reasons described above.
Other Comprehensive Income
We recorded 1.13 million for Financial Year ended March 31, 2021 as compared to 1.37 in
Financial Year ended March 31, 2020 which was primarily due to decrease in re-measurements of defined employee benefits, not to be classified in subsequent periods.
Total Comprehensive Income
Total comprehensive income increased by 63.03 million or 49.27 % from 127.92 million in
Financial Year ended March 31, 2020 to 190.95 million in Financial Year ended March 31, 2021, as a result of the factors described above.
Cash Flow
The table below summaries our cash flows from our Restated Financial Information for the nine months period ended December 31, 2022 and for the financial years ended March 31, 2022, 2021 and 2020:
( In Million) |
||||
| Particulars | For the Nine months period ended December 31, 2022 | For year ended March 31, | ||
| 2022 | 2021 | 2020 | ||
Net cash flow generated from/ (utilized in) operating activities (A) |
(785.89) | (33.27) | 348.39 | 378.89 |
Net cash flow utilized in investing activities (B) |
(519.49) | (296.93) | (53.40) | (90.39) |
Net cash flow generated from/ (utilized in) financing activities (C) |
1,186.21 | 417.22 | (289.77) | (254.40) |
Net (decrease)/ increase in cash & cash equivalents (A+B+C) |
(119.17) | 87.02 | 5.22 | 34.10 |
Cash and cash equivalents at the beginning of the period/ year |
131.91 | 44.89 | 39.67 | 5.57 |
Cash and cash equivalents at the end of the period/ year |
12.74 | 131.91 | 44.89 | 39.67 |
Cash flow from Operating Activities
For the nine months period ended December 31, 2022
Net cash flow utilized in our operating activities was 785.89 million for the nine-months nine months period ended December 31, 2022. Our operating profit before working capital changes was
925.28 million in the nine-months nine months period ended December 31, 2022, which was the result of the profit before tax for the period/year of 684.31 million adjusted primarily for depreciation and amortization of 48.88 million, finance costs of 204.78 million and interest income of 13.70 million. Our movements in working capital primarily consisted of an increase in trade payables of 390.92 million, an increase in trade receivables of 497.89 million, an increase in inventories of 1,422.61 million, an increase in other current assets of 124.91 million and an increase in other current liabilities of 182.56 million.
For the Financial year ended March 31, 2022
Net cash flow utilized in our operating activities was 33.27 million for the financial year ended March 31, 2022. Our operating profit before working capital changes was 873.53 million in the financial year ended March 31, 2022, which was the result of the profit before tax for the period/year of 603.81 million adjusted primarily for depreciation and amortization of 41.87 million, finance costs of 240.73 million and interest income of 14.66 million. Our movements in working capital primarily consisted of an increase in trade payables of 240.25 million, an increase in trade receivables of 167.79 million, an increase in inventories of 714.75 million, an increase in other current assets of 372.34 million and an increase in other current liabilities of 260.43 million.
For the Financial year ended March 31, 2021
Net cash flow generated from our operating activities was 348.39 million for the financial year ended March 31, 2021. Our operating profit before working capital changes was 457.35 million in the financial year ended March 31, 2021, which was the result of the profit before tax for the period/year of 256.78 million adjusted primarily for depreciation and amortization of 41.03 million, finance costs of 175.40 million and interest income of 15.81 million. Our movements in working capital primarily consisted of an increase in trade payables of 157.62 million, an increase in trade receivables of 76.66 million, an increase in inventories of 37.01 million, an increase in other financial asset of 30.63 million, an increase in other current assets of 39.59 million and an decrease in other current liabilities of 30.05 million.
For the Financial year ended March 31, 2020
Net cash flow generated from our operating activities was 378.89 million for the financial year ended March 31, 2020. Our operating profit before working capital changes was 385.16 million in the financial year ended March 31, 2020, which was the result of the profit before tax for the period/year of 183.56 million adjusted primarily for depreciation and amortization of 41.73 million, finance costs of 176.46 million and interest income of 17.04 million. Our movements in working capital primarily consisted of an increase in trade payables of 329.61 million, an increase in trade receivables of 157.16 million, an increase in inventories of 183.88 million, an increase in other current assets of 56.41 million and an increase in other current liabilities of 46.87 million.
Cash flow from Investing Activities
For the nine months period ended December 31, 2022
Net cash used in investing activities was 519.49 million for the nine months period ended December 31, 2022. This reflected the payment made towards the purchase of property, plant and equipment for 442.39 million, investment in fixed deposit of 88.85 million offset by receipt of interest income of 13.70 million.
For the Financial year ended March 31, 2022
Net cash used in investing activities was Rs 296.93 million for the financial year 2021-22. This reflected the payments made towards the purchase of property, plant and equipment for 285.50 million and investment property for 26.32 million. These payments were partially offset by receipt of interest income of 14.66 million.
For the Financial year ended March 31, 2021
Net cash used in investing activities was 53.40 million for the financial year 2020-21. This reflected the payment made towards the purchase of property, plant and equipment for 42.21 million, investment in fixed deposit of 26.78 million offset by receipt of interest income of 15.81 million.
For the Financial year ended March 31, 2020
Net cash used in investing activities was Rs 90.39 million for the financial year 2019-20. This reflected the payments made towards the purchase of property, plant and equipment for 62.07 million, investment in fixed deposit of 37.40 million offset by receipt of interest income of 17.04 million.
Cash flow from Financing Activities
For the nine months period ended December 31, 2022
Net cash generated from financing activities was 1,186.21 million for the nine months period ended December 31, 2022, consisting of proceeds from the issue of shares of 645.00 million, proceeds from long term borrowings of 458.76 million, repayment of long term borrowings of 172.26 million, net proceeds from short term borrowings of 459.49 million, and finance cost of 204.78 million.
For the Financial year ended March 31, 2022
Net cash generated from financing activities was 417.22 million for the financial year ended March 31, 2022, consisting of proceeds from long term borrowings of 440.93 million, repayment of long term borrowings of 141.16 million, net proceeds from short term borrowings of 358.18 million, and finance cost of 240.73 million.
For the Financial year ended March 31, 2021
Net cash used in financing activities was 289.77 million for the financial year ended March 31, 2021, consisting of proceeds from long term borrowings of 270.56 million, repayment of long term borrowings of 92.34 million, net repayment of short term borrowings of 292.59 million, and finance cost of 175.40 million.
For the Financial year ended March 31, 2020
Net cash used in financing activities was 254.40 million for the financial year ended March 31, 2020, consisting of proceeds from long term borrowings of 34.45 million, repayment of long term borrowings of 186.06 million, net proceeds from short term borrowings of 73.67 million, and finance cost of 176.46 million.
Financial Indebtedness
As on December 31, 2022 the total outstanding borrowings of our Company was 2,511.76 million. The following table sets out the details of the total borrowings outstanding as on December 31, 2022. For further details, please see "Financial Indebtedness" on Page 370.
| ( in Million) | |
Particulars |
As at December 31, 2022 |
Long Term Borrowings |
|
Secured |
|
| Term Loans from Banks & Financial Institutions | 553.10 |
Unsecured |
|
| Term Loans from Banks & Financial Institutions | 11.74 |
Sub Total (A) |
564.84 |
Short Term Borrowings |
|
Secured |
|
| Current Maturities of Long-Term Borrowings | 307.14 |
| Working Capital Loans from Banks & Financial Institutions | 967.24 |
Unsecured |
|
| Current Maturities of Long-Term Borrowings | 9.90 |
| Working Capital Loans from Banks & Financial Institutions | 323.20 |
| Working Capital Loans from Related Parties and Others | 339.44 |
Sub Total (B) |
1,946.92 |
Total (A)+(B) |
2,511.76 |
In the event, any of our lenders declare an event of default, such current and any future defaults could lead to acceleration of our repayment obligations, termination of one or more of our financing agreements or force us to sell our assets, any of which could adversely affect our business, results of operations and financial condition.
Contingent Liabilities
The following table sets forth our contingent liabilities as at December 31, 2022 and as at March 31, 2022, March 31, 2021 and March 31, 2020 as per the Restated Financial Information:
| ( In Million) | ||||
Particulars |
As at December 31, 2022 | As at March 31, 2022 | As at March 31, 2021 | As At March 31, 2020 |
| (i) Contingent liabilities | ||||
| (a) Claims against the company not acknowledged as debt; | ||||
| Income tax demand | 2.49 | 1.81 | 0.74 | 0.38 |
| Others | 111.95 | - | - | - |
| (b) Guarantees given to third parties | 2,488.72 | 1,805.33 | 2,017.12 | 1,697.15 |
It is not practical for our Company to estimate the timings of cash outflow, if any in respect of above pending resolutions of the respective proceedings. For further details, please see "Restated Financial
Information-Note 35-Contingent Liabilities" on page 322.
Off-Balance Sheet Items
We do not have any other off-balance sheet arrangements, derivative instruments or other relationships with any entity that have been established for the purposes of facilitating off-balance sheet arrangements.
Qualitative Disclosure about Market Risk
Market Risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of change in market prices. Market risk comprises three types of risk: foreign currency risk, interest rate risk and other price risk such as equity price risk and commodity/real estate risk.
Foreign Currency Risk
Currency risk is not material as the Companys primary business activities are within India and does not have significant exposure in foreign currency.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. Any movement in the reference rate could have an impact on the companys cash flows as well as costs. The company is subject to variable interest rates on some of its interest bearing liabilities. The Companys interest rate exposure is mainly related to debt obligations. The company seeks to mitigate such risk by maintaining an adequate proportion of variable and fixed rate debts.
Profit or loss is sensitive to higher/lower interest expense from borrowings as a result of change in interest rates. The following table demonstrates the sensitivity of variable rate debt instruments to a reasonably possible change in interest rates. The risk estimates provided assume a parallel shift of 100 basis points interest rate across all yield curves. This calculation also assumes that the change occurs at the balance sheet date and has been calculated based on risk exposures outstanding as at that date. The year end balances are not necessarily representative of the average debt outstanding during the period.
Particulars |
Impact on Profit Before Tax | |||
| December 31, 2022 | March 31, 2022 | March 31, 2021 | March 31, 2020 | |
| Interest Rate | ||||
| - Increase by 100 basis points | (17.71) | (13.57) | (8.63) | (8.54) |
| - Decrease by 100 basis points | 17.71 | 13.57 | 8.63 | 8.54 |
Credit Risk
Credit risk is the risk of loss that may arise on outstanding financial instruments if counterparty default on its obligations. The Companys exposure to credit risk arises majorly from trade receivables, loans, deposits with banks and other financial assets. Trade Receivables, deposits with banks and other financial assets like security deposits, are mostly with government bodies, banks, employees and group entities; hence, the Company does not expect any credit risk with respect to these financial assets. The carrying amount of financial assets represents the maximum credit exposure.
Liquidity Risk
Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at reasonable price. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of credit facilities to meet obligations when due. The Companys finance team is responsible for liquidity, funding as well as settlement management. In addition, processes and policies related to such risks are overseen by senior management. Management monitors the Companys liquidity position through rolling forecasts on the basis of expected cash flows.
Below is the table for Contractual maturities of financial liabilities:
Particulars |
Carrying Amount | Less than 1 year | 1 to 5 years | More Than 5 Years |
As at December 31, 2022 |
||||
| Trade Payables | 1,572.28 | 1,572.28 | - | - |
| Long Term Borrowings | 564.84 | - | 564.84 | - |
| Short Term Borrowings | 1,946.92 | 1,946.92 | - | - |
| Other financial Liabilities | 102.19 | 102.19 | - | - |
Total financial liabilities |
4,186.23 | 3,621.39 | 564.84 | - |
Ast at March 31, 2022 |
||||
| Trade Payables | 1,181.36 | 1,181.36 | - | |
| Long Term Borrowings | 418.62 | - | 405.45 | 13.17 |
| Short Term Borrowings | 1,347.15 | 1,347.15 | - | |
| Other financial Liabilities | 123.47 | 123.47 | ||
Total financial liabilities |
3,070.60 | 2,651.98 | 405.45 | 13.17 |
At at March 31, 2021 |
||||
| Trade Payables | 941.11 | 941.11 | - | - |
| Long Term Borrowings | 190.56 | - | 190.56 | - |
| Short Term Borrowings | 917.26 | 917.26 | - | |
| Other financial Liabilities | ||||
Total financial liabilities |
2,048.92 | 1,858.37 | 190.56 | - |
As at March 31, 2020 |
||||
| Trade Payables | 783.48 | 783.48 | - | - |
| Long Term Borrowings | 39.12 | - | 39.12 | - |
| Short Term Borrowings | 1,183.05 | 1,183.05 | - | - |
| Other financial Liabilities | 54.25 | 54.25 | ||
Total financial liabilities |
2,059.90 | 2,020.78 | 39.12 | - |
Effect of Inflation
We are affected by inflation as it has an impact on the material cost, wages, etc. in line with changing inflation rates; we rework our margins so as to absorb the inflationary impact. We are exposed to credit risk on monies owed to us by our customers. If our customers do not pay us promptly, or at all, we may have to make provisions for or write-off such amounts.
Reservations, Qualifications and Adverse Remarks
Except as disclosed in chapter titled "Restated Financial Information" on page 276, there have been no reservations, qualifications and adverse remarks.
Details of Default, if any, including therein the Amount Involved, Duration of Default and Present Status, in Repayment of Statutory Dues or Repayment of Debentures or Repayment of Deposits or
Repayment of Loans from any Bank or Financial Institution.
Except as disclosed in chapter titled "Restated Financial Information" on page 276, there have been no defaults in payment of statutory dues or repayment of debentures & interest thereon or repayment of deposits & interest thereon or repayment of loans from any bank or financial institution and interest thereon by the Company.
Material Frauds
There are no material frauds, as reported by our statutory auditor, committed against our Company, in the last three Financial Years.
Unusual or Infrequent Events or Transactions
As on date, there have been no unusual or infrequent events or transactions including unusual trends on account of business activity, unusual items of income, change of accounting policies and discretionary reduction of expenses.
Significant Economic Changes that Materially Affected or are Likely to Affect Income from Continuing Operations
Indian rules and regulations as well as the overall growth of the Indian economy have a significant bearing on our operations. Major changes in these factors can significantly impact income from continuing operations. There are no significant economic changes that materially affected our
Company‘s operations or are likely to affect income from continuing operations except as described in chapter titled "Risk Factors" on page 49.
Known Trends or Uncertainties that have had or are expected to have a Material Adverse Impact on Sales, Revenue or Income from Continuing Operations
Other than as described in the section titled "Risk Factors" on page 49 and in this chapter, to our knowledge there are no known trends or uncertainties that are expected to have a material adverse impact on revenues or income of our Company from continuing operations.
Future Changes in Relationship between Costs and Revenues, in Case of Events Such as Future Increase in Labour or Material Costs or Prices that will Cause a Material Change are known
Other than as described in chapter titled "Risk Factors" on page 49 and in this section, to our knowledge there are no known factors that might affect the future relationship between cost and revenue.
Extent to which Material Increases in Net Sales or Revenue are due to Increased Sales Volume, Introduction of New Products or Services or Increased Sales Prices
Our business has been affected and we expect that it will continue to be affected by the trends identified above and the uncertainties described in the section "Risk Factors" on page 49. Changes in revenue in the last three Financial Years are as described in "Results of Operations Information for the Financial Year ended March 31, 2022 compared with Financial Year ended March 31, 2021" and
"Results of Operations Information for the Financial Year ended March 31, 2021 compared with Financial Year ended March 31, 2020" mentioned above.
Total Turnover of Each Major Industry Segment in Which the Issuer Operates
We operate in only one major segment.
Competitive Conditions
We expect competition in our industry from existing and potential competitors to intensify. For further details on competitive conditions that we face across our various business segments, please see
"Our Business", "Industry Overview" and "Risk Factors" on pages 180, 147 and 49.
Status of any Publicly Announced New Products or Business Segments
Except as disclosed elsewhere in the Draft Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new products or business segments.
Significant Dependence on a Single or Few Customers
Our business is substantially dependent on water supply projects in India awarded by government authorities and other entities funded by the central and/ or state governments. We derive almost all of our revenue from contracts awarded by government entities. Our business could be materially and adversely affected if there are adverse changes in the policies and delays in awarding contracts by these authorities, among other risks. For further details, please see "Risk Factors - We derive a significant portion of our revenues from a limited number of clients. The loss of any significant clients may have an adverse effect on our business, financial condition, results of operations, and prospect." on page 51.
The percentage of revenue from operations derived from our top clients is given below:
(in million) |
||||||||
Sr. Particulars No. |
As at December 31, 2022 |
FY 2021-22 |
FY 2020-21 |
FY 2019-20 |
||||
| Revenue | % | Revenue | % | Revenue | % | Revenue | % | |
1 Revenue from Top 5 Clients |
5,711.63 | 80.14 | 6,436.11 | 81.92 | 4,030.74 | 82.98 | 2,892.29 | 77.51 |
2 Revenue from Top 10 Clients |
6,576.95 | 92.29 | 7,393.46 | 94.10 | 4,449.37 | 91.60 | 3,480.63 | 93.29 |
As certified by M/s Banshi Jain & Associates, Chartered Accountants vide certificate dated April 05, 2023
IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000
IIFL Securities Support WhatsApp Number
+91 9892691696
Download The App Now
Follow us on
2024, IIFL Securities Ltd. All Rights Reserved
www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213,IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.
